IHOP 2008 Annual Report Download - page 138

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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
20. Income Taxes (Continued)
Net deferred tax assets (liabilities) consist of the following components:
2008 2007
(In thousands)
Differences in capitalization and depreciation and amortization of reacquired
franchises and equipment ...................................... $ 4,871 $ 5,153
Differences in acquisition financing costs ............................ 26,889 36,239
Employee compensation ........................................ 23,122 23,683
Other comprehensive income primarily interest rate swap loss ............. 18,811 23,944
Differences in capitalization, amortization and depreciation(1) ............. — 57,045
Deferred gain on sale of assets ................................... 1,447 —
Book/tax difference in revenue recognition ........................... 11,568 3,883
Michigan business tax .......................................... 9,399 1,896
Other ...................................................... 28,396 17,594
Deferred tax assets ............................................ 124,503 169,437
Valuation allowance ........................................... (7,010) (2,613)
Total deferred tax assets after valuation allowance ...................... 117,493 166,824
Differences between financial and tax accounting in the recognition of
franchise and equipment sales .................................. (69,296) (76,994)
Differences in capitalization and depreciation(1) ....................... (382,648) (546,652)
Differences in acquisition financing costs ............................ (16,256) —
Differences between book and tax basis of property and equipment ......... (8,933) (7,769)
Other ...................................................... (8,304) (18,412)
Deferred tax liabilities .......................................... (485,437) (649,827)
Net deferred tax (liabilities) ...................................... $(367,944) $(483,003)
Net deferred tax asset (liability)—current ............................ $ 29,586 $ 22,406
Valuation allowance—current ..................................... (2,082) (544)
Net deferred tax asset (liability)—current ............................ 27,504 21,862
Net deferred tax asset (liability)—non current ......................... (390,520) (502,796)
Valuation allowance—non current ................................. (4,928) (2,069)
Net deferred tax asset (liability)—non current ......................... (395,448) (504,865)
Net deferred tax (liabilities) ...................................... $(367,944) $(483,003)
(1) Primarily related to the Applebee’s acquisition.
The Company or one of its subsidiaries files Federal income tax returns and income tax returns in
various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to
federal, state or non-U.S. income tax examinations by tax authorities for years before 2004 for federal
returns and 2000 for other jurisdictions.
The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the
implementation of FIN 48, the Company recognized approximately a $0.7 million increase in the
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